State economists put cost of tax cuts at $600 million

Published: Thursday, November 21, 2013 at 11:23 p.m.

Last Modified: Thursday, November 21, 2013 at 11:23 p.m.

TALLAHASSEE — Tax cuts will be a popular topic in the coming election year.

But as state economists met Wednesday to evaluate the first batch of tax-cutting plans for the 2014 Legislature, it is already apparent that the popularity of the measures likely will exceed the amount of revenue the state will have to fund them.

Economists put a preliminary cost estimate of more than $600 million on the initial measures, which ranged from cutting the taxes Floridians pay on their cellphone and cable TV bills to tax holidays for school and hurricane supplies.

Gov. Rick Scott has said he will advance a $500 million tax-cutting package for the 2014-15 budget year, although he said this week he is still evaluating his options.

“I continue to listen to the citizens around the state,” Scott said. “I continue to listen to the Legislature.”

But Scott emphasized he has called for tax cuts in his first three years in office and plans to do so in his state budget proposal for 2014, which also coincides with his re-election.

How much taxes can actually be cut remains unclear. The state anticipates a budget surplus of some $846 million next year. But the revenue growth will easily be outstripped by the growing number of tax-cutting plans as well as the state’s funding needs for programs including Medicaid and public education.

In Wednesday’s meeting, state economists looked at a half-dozen tax cuts, the first group of proposals that may be considered next year.

A measure by Sen. Dorothy Hukill, R-Port Orange, would cut the state tax that Floridians pay on their cellphones, cable TV and other communication services by 2 percent. It would result in a $282 million savings to consumers but also reduce state revenue by that amount.

Floridians pay one of the highest communication services taxes in the country. And in filing the bill (SB 266) last month, Hukill called it a “dreaded tax.”

“There are more than 18 million cellphones alone in Florida today and growing daily,” she said in a statement. “Floridians need a tax break, and this is the tax break they deserve.”

Hukill, who is the chair of the Senate budget subcommittee on finance and tax, also filed a bill (SB 176) that will cut the state sales tax rate that Florida businesses pay on their commercial leases, from 6 percent to 5 percent.

Florida business groups have pushed the tax break, arguing that the state is one of the few governments that taxes commercial property leases. Economists put a preliminary estimate of $236 million on the tax cut.

State sales tax holidays have been popular with Florida retailers as well as consumers. Several proposals have already emerged for the 2014 session.

Although no specific bills have yet been filed, economists looked at plans to have either a three-day sales tax holiday for school supplies and clothing in the coming year or a 10-day tax holiday.

The shorter holiday, which would run from Aug. 1 to Aug. 3, would cost an estimated $36 million, with consumers saving $27 million on clothing and shoes, $4.5 million on school supplies and $3.8 million on computer purchases of less than $750.

The longer school-related tax holiday, which would run from Aug. 1-10, would cost $55 million.

Sen. Rob Bradley, R-Fleming Island, has filed a bill (SB 362) to revive the hurricane-supplies sales tax holiday. It would run from June 1-12, the beginning of the annual hurricane season, and allow consumers to make tax-free purchases of items like portable radios, batteries, tarps and food coolers.

Economists put a preliminary estimate of $3.3 million on it but cautioned it would depend on how many portable generators that Floridians would purchase during the tax holiday. The bill allows the tax-free purchase of generators up to $750 in value.

In his 2010 election, Scott called for the elimination of the state’s corporate income tax. He hasn’t made much headway in reducing the overall tax, which brings in more than $2 billion a year for the state budget. But Scott has successfully expanded the corporate tax exemption for many smaller Florida businesses.

A new measure (SB 134), which is also sponsored by Hukill, would expand the exemption from $50,000 to $70,000 in corporate income, allowing an estimated 2,200 Florida businesses to avoid the tax. It would cost some $22 million.

A number of other tax-cutting proposals are likely to be on the 2014 legislative agenda.

Senate Appropriations Chairman Joe Negron, R-Stuart, is sponsoring a bill (SB 156) that would roll back motor vehicle fee increases. It would cost about $233 million a year and bring an estimated $12 savings to individual motorists.

State Agriculture Commissioner Adam Putnam wants to cut the sales tax that Florida businesses pay on their electricity use and redirect some of the funding toward school construction and maintenance. It would have a $250 million impact.

<p>TALLAHASSEE — Tax cuts will be a popular topic in the coming election year.</p><p>But as state economists met Wednesday to evaluate the first batch of tax-cutting plans for the 2014 Legislature, it is already apparent that the popularity of the measures likely will exceed the amount of revenue the state will have to fund them.</p><p>Economists put a preliminary cost estimate of more than $600 million on the initial measures, which ranged from cutting the taxes Floridians pay on their cellphone and cable TV bills to tax holidays for school and hurricane supplies.</p><p>Gov. Rick Scott has said he will advance a $500 million tax-cutting package for the 2014-15 budget year, although he said this week he is still evaluating his options.</p><p>“I continue to listen to the citizens around the state,” Scott said. “I continue to listen to the Legislature.”</p><p>But Scott emphasized he has called for tax cuts in his first three years in office and plans to do so in his state budget proposal for 2014, which also coincides with his re-election.</p><p>How much taxes can actually be cut remains unclear. The state anticipates a budget surplus of some $846 million next year. But the revenue growth will easily be outstripped by the growing number of tax-cutting plans as well as the state's funding needs for programs including Medicaid and public education.</p><p>In Wednesday's meeting, state economists looked at a half-dozen tax cuts, the first group of proposals that may be considered next year.</p><p>A measure by Sen. Dorothy Hukill, R-Port Orange, would cut the state tax that Floridians pay on their cellphones, cable TV and other communication services by 2 percent. It would result in a $282 million savings to consumers but also reduce state revenue by that amount.</p><p>Floridians pay one of the highest communication services taxes in the country. And in filing the bill (SB 266) last month, Hukill called it a “dreaded tax.”</p><p>“There are more than 18 million cellphones alone in Florida today and growing daily,” she said in a statement. “Floridians need a tax break, and this is the tax break they deserve.”</p><p>Hukill, who is the chair of the Senate budget subcommittee on finance and tax, also filed a bill (SB 176) that will cut the state sales tax rate that Florida businesses pay on their commercial leases, from 6 percent to 5 percent.</p><p>Florida business groups have pushed the tax break, arguing that the state is one of the few governments that taxes commercial property leases. Economists put a preliminary estimate of $236 million on the tax cut.</p><p>State sales tax holidays have been popular with Florida retailers as well as consumers. Several proposals have already emerged for the 2014 session.</p><p>Although no specific bills have yet been filed, economists looked at plans to have either a three-day sales tax holiday for school supplies and clothing in the coming year or a 10-day tax holiday.</p><p>The shorter holiday, which would run from Aug. 1 to Aug. 3, would cost an estimated $36 million, with consumers saving $27 million on clothing and shoes, $4.5 million on school supplies and $3.8 million on computer purchases of less than $750.</p><p>The longer school-related tax holiday, which would run from Aug. 1-10, would cost $55 million.</p><p>Sen. Rob Bradley, R-Fleming Island, has filed a bill (SB 362) to revive the hurricane-supplies sales tax holiday. It would run from June 1-12, the beginning of the annual hurricane season, and allow consumers to make tax-free purchases of items like portable radios, batteries, tarps and food coolers.</p><p>Economists put a preliminary estimate of $3.3 million on it but cautioned it would depend on how many portable generators that Floridians would purchase during the tax holiday. The bill allows the tax-free purchase of generators up to $750 in value.</p><p>In his 2010 election, Scott called for the elimination of the state's corporate income tax. He hasn't made much headway in reducing the overall tax, which brings in more than $2 billion a year for the state budget. But Scott has successfully expanded the corporate tax exemption for many smaller Florida businesses.</p><p>A new measure (SB 134), which is also sponsored by Hukill, would expand the exemption from $50,000 to $70,000 in corporate income, allowing an estimated 2,200 Florida businesses to avoid the tax. It would cost some $22 million.</p><p>A number of other tax-cutting proposals are likely to be on the 2014 legislative agenda.</p><p>Senate Appropriations Chairman Joe Negron, R-Stuart, is sponsoring a bill (SB 156) that would roll back motor vehicle fee increases. It would cost about $233 million a year and bring an estimated $12 savings to individual motorists.</p><p>State Agriculture Commissioner Adam Putnam wants to cut the sales tax that Florida businesses pay on their electricity use and redirect some of the funding toward school construction and maintenance. It would have a $250 million impact.</p>